Inheriting a property in Spain - I-VEO Real Estate

1. A) THE HERITAGE

Without going into the details of the inheritance law regulated in the Civil Code in Book III, we are interested in what happens when a property in Spain is inherited.

First of all, a distinction must be made between the division and acceptance of an inheritance:

- ACCEPTING AN INHERITANCE is a free and voluntary act by which a person called to inheritance expresses his willingness to accept an inheritance.

- THE GRANT OF AN INHERITANCE is the act by which the heirs who have accepted the inheritance divide the property by acquiring their property.

If the matter is clear and easy to distribute, the corresponding taxes are settled in Spain and the changes are made in the land registry for a property.

1. B) SELLING A PROPERTY WITH CO-OWNERSHIP

If an indivisible property is inherited between several heirs, it is not uncommon for conflicts to arise in the division of assets.

In the event that money or other assets are present, compensation for the transfer of the property could be sought. If not, in order to be able to sell a property with multiple owners, the consent of all is required, otherwise the sale is valid.

Thus, a property cannot be sold if one of the heirs does not agree to it.

If co-ownership of the property cannot be avoided and one of the heirs wants to sell the property, you can do the following:

- Sell your part of the property to the remaining heirs or to third parties. The other heirs have a privilege to this undivided participation by paying the sales price. If you would like more information on the subject, we will present it to you in another article on the right of first refusal.

- All heirs agree that you can consult a mediator before the judicial process to find an appropriate solution for all interests.

- If the heirs do not agree, the judicial process remains at the end and you can request the termination of the co-ownership of the inheritance and the public auction of the property in accordance with Spanish Law 15/2015. An appraisal of the property is requested and then it is auctioned.

The other co-owners can take part in the auction in order to bid on it. The disadvantage is that if the property is auctioned together, the hammer price can be below the market price.

In summary, it can be said that in these inheritance cases, an agreement is always made between the heirs in order to avoid bad times and costs (lawyer, appraiser, court proceedings, ...). In addition, it should be noted that the sale of a property through public auctions is usually at a lower price than it would be sold on the market.

1. C) INHERITANCE FROM NON RESIDENTS IN SPAIN

If a property is inherited in Spain and the inheritance is not resident in Spain, these inheritances are regulated by the European Regulation 650/2012 on inheritance and the creation of the European Certificate of Inheritance. A non-resident foreigner inheriting a property in Spain must keep in mind that they will have to pay inheritance tax in Spain and local capital gains tax. Please note that it is only taxed on goods in Spain, not on foreign goods.

The applicable regulations vary depending on where you live:

- Residents within the European Union: The rules of the Autonomous Community, in which the deceased has the most assets, apply.

- Residents of other countries: the applicable regulation is the state one.

For further information, our I-VEO lawyers can advise you on the handling of your inheritance.